Re:Average Rent in San Francisco Has Dropped $1k This Year
by imtringued on Monday December 28, 2020 @12:46PM
(#25561256)
The supply and demand based solution to price gouging is to make the government guarantee access to the good at the desired price.
Price gouging laws themselves don't solve the problem.
If anything, the government can pretend that the problem has been solved and block any potential resolution. They can make the problem far worse.
I'll say it over and over again. If you want to fix the economics then you must fix physical reality.
Why does the government guarantee work? Because it will be the government's responsibility to fix the problem. If the government created laws that caused the problem then it will be forced to change those laws.
The classic price gouging example is the mask shortage where people will constantly say that manufacturers can't expand their supply fast enough so price gouging is inevitable and the duct tape fix is the only way to solve the problem. If you introduce a government price guarantee the government will be forced to buy existing masks off the private market and sell them for a lower price. Effectively subsidizing the manufacturers of the mask. The manufacturer can charge an increasing amount of money for the masks until it becomes profitable to expand production capacity immediately. What if greedy manufacturers gouge the government? The obligation to provide masks doesn't disappear because of a little greed. In fact, the government can just buy the manufacturers and build its own factories and completely remove the need for uncompetitive mask manufacturers. If anything, there is now immense pressure for private industry to stay relevant by offering prices lower than what the government is guaranteeing.
Price gouging laws themselves don't solve the problem.
If anything, the government can pretend that the problem has been solved and block any potential resolution. They can make the problem far worse.
I'll say it over and over again. If you want to fix the economics then you must fix physical reality.
Why does the government guarantee work? Because it will be the government's responsibility to fix the problem. If the government created laws that caused the problem then it will be forced to change those laws.
The classic price gouging example is the mask shortage where people will constantly say that manufacturers can't expand their supply fast enough so price gouging is inevitable and the duct tape fix is the only way to solve the problem. If you introduce a government price guarantee the government will be forced to buy existing masks off the private market and sell them for a lower price. Effectively subsidizing the manufacturers of the mask. The manufacturer can charge an increasing amount of money for the masks until it becomes profitable to expand production capacity immediately. What if greedy manufacturers gouge the government? The obligation to provide masks doesn't disappear because of a little greed. In fact, the government can just buy the manufacturers and build its own factories and completely remove the need for uncompetitive mask manufacturers. If anything, there is now immense pressure for private industry to stay relevant by offering prices lower than what the government is guaranteeing.